CNBC’s Jim Kramer on Monday questioned the merits of leadership shakeup at railroad operator CSX amid speculation that further industry consolidation could be underway. Joe Hinrichs is competing as CSX CEO after three years of work, the company announced Monday. His replacement is 70-year-old Steve Angel, who has been operating industrial gas giant Linde for over three years after his merger with Praxair in 2018. Angel piloted the Prax for over a decade before Megadale was completed. “I don’t like this, I think it’s cheating,” Kramer said in “Scoke on the Street.” Hinrich “did you do a great job,” Cramer said. He later said, “The board panic and said, ‘Listen, why can’t we get a deal?’ “During Hinrichs’ tenure, which began on September 26, 2022, CSX shares rose 28.3% on a total return basis, including dividends, according to Factset data. On the same stretch, Railway Pier Canada Pacific Kansas City returned 10.3%. Union Pacific returned 23.6%, while Norfolk Southern rose 46.4%. Indeed, Cramer said on Monday that he is paying homage to CSX’s new CEO Angel. Cramer’s Charitable Trust, a portfolio used by CNBC Investing Club, owns Linde’s stock, and the industry is used from electronics to drinks in a variety of industries. “I love Steve,” he said. Rather, Cramer’s rage focused on CSX’s board decision-making. CSX declined to comment on Cramer’s remarks. Union Pacific announced its $85 billion acquisition of Norfolk Southern in late July. If approved by the regulatory authority, it was contracted to create operators from the first coast to the coast of the freight railway. It sparked a wave of chatter that additional industry alliances could occur. So we’ve put the spotlight on US-based CSX and Berkshire Hathaway BNSF, and Alberta, Canada-based CPKC. In mid-August activist investor Ancora urged CSX to pursue trading or replace Hinrichs, Reuters reported at the time. However, on August 25, Berkshire CEO Warren Buffett told CNBC that BNSF was not interested in purchasing another railway entirely, and instead supported more cooperation between operators to achieve greater efficiency. A few days before Buffett’s comments, BNSF and CSX announced their coast-to-coast service partnership. The CSX line is concentrated on parts of the East Coast and Midwest, but the footprint of the BNSF is primarily located west of the Mississippi River. In a statement posted on CPKC’s website dated August 26, the company said, “Despite the suggestions of those participating, there is no interest in participating in the rail industry consolidation for the time being. CPKC does not believe that the currently structured industry requires further rail integration.” CPKC is known for running the first single-line rail network linking Canada, the US and Mexico. Hinrichs, who appeared in Cramer’s “Mad Money” on August 27, said they believe railroad operators can improve the bottlenecks of the exchange. The then CEO of CSX told Cramer that it can take 18 to 24 hours to complete the exchange process, and perhaps more. “The customer says, ‘Hey, I don’t need this anymore. I want a seamless experience.’ You don’t need to merge to do that. In the same interview with Cramer, Hinrichs confirmed he recently met with Buffett, but said that Burkshire never offered to buy CSX. “But they made it clear they want to work together to solve these issues and create opportunities for growth for all of us. That’s the key point.” Looking back on Monday in an August interview with Hinrichs, Cramer argued that the CSX issue is that they can’t buy the company and not the BNSF. BNSF did not immediately respond to CNBC’s request for comment.
